The good news: America’s politics are neither polarized nor dysfunctional. That’s also the bad news.

Summary: How sad that we so underestimate our leaders, confusing their skillful political engineering with folly. Of course their successful manipulation of us allows them to laugh at our scorn. This is the next in a series; at the end are links to previous chapters.

Many Americans rage at the dysfunctional polarization of our politics. How can our representatives agree upon necessary policy reforms when the two parties have such different positions and refuse to compromise. Our imbalance between government revenue and expenditures will bankrupt us if not closed. Our health care policy will bankrupt us if not changed. This is the consensus viewpoint, and totally wrong.

In 2007 and 2008 we saw a similar polarization in foreign and homeland security policies. Widespread domestic surveillance, torture, rendition, illegal foreign wars, kangaroo courts for foreigners imprisoned on flimsy evidence. These were necessary to protect the homeland — or the acts of a second Hitler. This led to the fiercely contested presidential election. The Democratic Party’s anti-Nazi platform won, but once in office their candidate continued and expanded Bush Jr’s policies (eg, see this Glenn Greenwald article about conservatives and liberals applauding Obama’s foreign and national security policies).

The apparent polarization was a farce, played by our ruling elites on a gullible American public. We accept it, conditioned to fear by years of scary propaganda and FBI-manufactured terrorist conspiracies — expert information operations directed at us.

Now the same dynamics repeat. Scary stories (mostly fake) about the nearly bankrupt Federal government incite panic and prepare us for what is to come. No matter who wins in the 2012 elections, in 2013 our representatives will raise taxes, cut expenditures (including Social Security and Medicare), start rebuilding our infrastructure, and begin the long process of reforming health care. It will be another Morning in America.

There is no crippling polarization, just distracting music masking a bipartisan consensus on key points of economic and foreign policy. It serves the valuable secondary purpose of distracting the proles. It gives them mock battles to fight and tribal loyalties to adopt (dirty hippy commies vs. puritanical ignorant fascists). Preventing the discovery of common causes, mutual allegiances, and the need for fundamental reform.

America is well-governed. But not in our interests.

How to choose a political party

Today we get to choose a political party like cattle at the Chicago stockyards get to choose a chute. The cattle (being smarter than us) don’t bother with party identification. They don’t cheer the “left-side” pen, or admire the virtue of its prisoners, the beauty of its fence, the wisdom of their keepers, or the free food. Those in the “right-side” pen don’t wear logos or trumpet their superior intelligence over those in the other pen.

It need not be like this. Both parties belong to us. Both must and can be retaken. America needs a choice, not an echo (to borrow Phyllis Schlafy’s memorable phrase).

This is difficult to hear. I think a lot of people are “independents” and are rightly disgusted by the parties in power. But you advocate we join them and take back power. I think you are right. Being outside of the political parties limits the capacity for self rule. If we all wait for the Ds and the Rs to fix themselves it will never happen. I guess what FM is saying is that there is no magic bullet. We have to bite the bullet and join the parties and do the work. Something close to ‘freedom is participation power’.

I see one problem with the next generation of political actors, and even the most recent generations, is that they are manipulated and corrupted by their own propaganda. Newly minted elites pulling the levers of power without the slightest understanding of what the real effects of their policies will be, shielded by their belief in the propaganda of their tribal affiliation. By the time a reality check arrives a lot of unnecessary suffering may have occurred. I am reminded in some way of pre-revolution France where the elites were so focused on and successful at maintaining political power that they became disconnected and lost control when the reality check came.

Those are all good points. So far, however, our elites have managed America quite well. They have maintained its global military hegemony, while increasing their wealth and political control.

This is a vital point. Many people calling for reforms do so on the grounds that our elites are wrecking America. Perhaps so, but every year in which that does not happen in effect proves these claims wrong. A stronger and more powerful reason to reclaim America concerns liberty — not prosperity.

“start rebuilding our infrastructure, and begin the long process of reforming health care.”

This will tell us weather or not your thesis is right, and America is being governed by an elite capable of enlightened self interest and long term planning.

I suspect you’ll see Medicare and the VA voucherized and privatized, another serious push to steal the Social Security trust fund and drive all payroll taxes into the stock market, and infrastructure repair used as cover for programs which use taxpayer financing to create toll roads and bridges where private companies collect the revenue.

My thesis is that America is being run by a loose association of wealthy interests with no coherent agenda beyond converting all public services into means of capturing rents for the private sector and removing any restraints on their own behavior, and that this elite does not care what the long term effects of their actions will be on the nation.

I also believe that this loose association IS capable of occasionally sacrificing their short term goals to maintain the goodwill of what remains of the middle class but that in the long run their greed will pit them increasingly against each other as happened in the first Gilded Age.

Medicare has been voucherized and the insurers couldn’t make a profit. Medicare will need to be privatized.

SS is funded by the Treasury printing checks. No tax dollars are required. The greatest fraud perpetrated on the public today is that there is an operational link between federal spending and revenues (taxes and bond sales.) The US has a sovereign fiat currency and is a currency issuer. There is no operational link – in fact, in this type of system, government spending must necessarily come before anyone will have the currency to make tax payments.

“SS is funded by the Treasury printing checks. No tax dollars are required.”

Yes, this is a trendy theory (to which you seem to be alluding) that the government can print almost unlimted currency without ill consequences. It is the mirror image of the austerian (not Austrian) obsession with gold and inflation. They are bookends. It is evidence of great social stress when such nonsense — fringe economic and political theories — become widely accepted.

Afterwards, when the seas are calm again (as they will be, however horrific the storm), people look upon these as symptoms of the madness caused by the stress. But they seem logical at the time.

“Medicare has been voucherized and the insurers couldn’t make a profit. Medicare will need to be privatized.”

It is fascinating the degree to which Americans have been indoctrinated to believe counter-factual things. Medicare delievers health care services at far lower cost than the for-profit insurance system. Privatizing it would greatly increase the cost. This is of course heresy to the religious right, no matter how vast the factual support.

I guess you can call it trendy when an accredited university – Univ. of Missouri Kansas City – has a graduate economics program designed around it. There are many well-respected economists who are advocates of Modern Monetary Theory – it is troubling that you call the work of the university and these economists “nonsense”.

Perhaps we can have another posting, so that we are not hijacking this thread, where your full critique of MMT can be digested and a proper response offered.

I don’t debate technical subjects. I leave that to the experts. It will sort itself out, eventually. Like Polywater. Pathological science (see Wikipedia) is an inherent result of the scientific methods. It is, for obvious reasons, more common in the social science. (Note: the term “pathological science” is not an accurate description, but has entered into general use)

I’m loathe to complain, but your blog is very ineffective at replying to certain comments. I mean this in the most constructive way.

I typed my comment on Medicare quite quickly, and was too clever by half. I agree most completely that the issues with Medicare costs have everything to do with rising health care costs and almost nothing to do with delivery. I was trying, most uselessly, to say that in order for private insurers to make a profit, the whole system will need to be privatized – which necessarily means it will cost more money.

First, it’s not bizarre. It essentially explains the system as it works – have you read any of the economists who support the theory? If yes, on what grounds to you dismiss it as bizarre? If no, why not keep an open mind and try to understand it before dismissing it?

It is a bit of a head turner because it is counter-intuitive to everything we are taught and spoon fed by the media. But it makes sense, and has become the life work of thousands of economists. If you’re open to reading just a bit more on this, I can make a few recommendations that helped me when I first embarked on this self-study program:

I found Warren Mosler’s 7 Deadly Innocent Frauds of Economic Policy interesting enough to pursue more info. Like you, I was very skeptical. I have a graduate degree from a very conservative B-school, and this was difficult to comprehend. Not because the subject matter was complex, as you indicate, but because it is not the consensus view. Here’s a link to Warren’s book: http://moslereconomics.com/wp-content/powerpoints/7DIF.pdf

Further research turned up Cullen’s work, which can be dense, but I found Professor Bill Mitchell’s work on deficit spending to be what began to change my paradigm. Here’s the first of his three part series: http://bilbo.economicoutlook.net/blog/?p=332

I’m still researching and still learning. But I know enough to know that this is not a bizarre theory, or that it is nonsense. I encourage you to learn more about it. What’s to lose?

In answer to your Minsky question, here’s a quick link to a Wiki page that references L. Randall Wray and C. Roche, and academic papers that they have written that reference Minsky’s work. In addition, there is an abundance of academic research behind MMT. As I previously mentioned, UM at KC has a graduate economics program designed around MMT.

Update, based on later comment: You did not include the Wikipedia you mentioned, which I assume was the entry for Modern Monetary Theory (aka Chartalism). I strongly suggest you not rely on Wikipedia for information on these kinds of subjects. Their pages are often written by enthusiasts, sometimes filled with inaccuracies. The links are usually useful; the text should be regarded with skepticism.

Citing Minsky as a Chartalist is an exaggeration. L Randall Wray, the source of this, correctly mentions “tendencies” in Minsky’s writing — the ability to epand the money supply in a counter-cyclical fashion. This is the now conventional belief that “if there are unemployed resources, the government can always afford to hire them”. But that’s not the same as belief in MMT.

“So far, however, our elites have managed America quite well.” I’d add the rest of much of the World.

Nope I disagree, “never in human history has so many people been led by such incompetent (moronic even) leaders”. Since Thatcher (UK), Reagan (US), Hawke/Keating (Aus), etc the West, starting with the Anglo ones, have dismantled everything that made us rich and, being honest, dominant. When you read about dodgy Chinese computer chips affecting our so great military forces, then you know the gig is up (hint: we cant make them anymore, given our cuts to science education .. we will never be able to make them .. like ever).

The old term about the British Army ” lions led by donkeys” doesn’t even do it justice. “Dogs led by fleas” perhaps?

It depends though on your time horizon. Lets go through the US ‘elite’ record over the last 10 years:

Giga wealth for the top 1%. Multiple wars. Global financial collapse (GFC). Totally bankrupt nations, states, counties, companies, cities, etc. Transfer, for a short time, of private debts to Govts = the ordinary taxpayer (since the wealthy haven’t paid taxes for decades) = more giga wealth .. for a short time.

Hmmm how long is this going on for?

But in the end ‘the mob’ always wins, even if Pyrrhically. And you get a Mussilini (creator of of the much admired by elites Fascism .. the current Western model) hanging upside down off a lamp post.

For those ‘elites’ who bet on the ‘national security state’ model to keep the proles in their place .. I always mention East Germany. Typical Germans they created the perfect totalitarian police state, much better than their masters the USSR did (and so much better than the shambolic US one) .. and it went down like a house of cards .. whoops.

So if I was part of a ‘smart elite’ (contradiction in terms these days) I’d be real careful. Yeh I might get away with it for a while, even for my life .. maybe …but my children?

Honorable Maximus. Being just a humble big-truck driver, trying to put food on the table for the family, I like this article. What comes to mind is ,”If men were angels..” What also comes to mind is this one.
“The people are responsible for the character of their Congress. If that body be ignorant, reckless and corrupt, it is because the people tolorate ignorance, recklessness and corruption. If it be intelligent, brave, and pure, it is because the people demand these high qualities to represent them in the national legislature.” James A. Garfield, 1877
As an immigrant from a country that was formerly a dictatorship, I kiss the ground I walk on. We most definitley have the best system. It is up to us to do a good house cleaning every so often to scatter the rats that have made their homes in our domain.
I work as an election inspector every year in my town. It saddens when the voters only come out to vote in the presidential elections. Very few come out and vote in local, district and state elections. And add to the fact that many do not know who they are voting for, let alone that many do not know who is in office NOW! I guess that means, “Ignorance is bliss?”
Where we can use a good house cleaning is in the media. True investigative reporting is a dying craft. There may be a few, but far and few in between. I heard of stories of politicians scared to death of a specific reporter or reporters. As a young child I grew up reading the NY Times and the Daily News. I enjoyed it when they exposed a corrupt politicain or two. Now they glorify them, regardless of party. As if they don’t want to upset them, so they can join them at the next cocktail party.

Thank you for your comment, especially valuable coming from a new American. And special thanks for the Garfield quote.

“True investigative reporting is a dying craft. There may be a few, but far and few in between.”

The news media sell product, like every business. Too few people wish to read investigative reporting in order to distribute it in an advertising-supported distribution media. Even fewer will pay to read it. Free markets deliver what we want — not what we need.

I like the cattle analogy – perfectly fitting. It seems to me that for the last several decades, we have lived in a time much like that of Rome before the fall. Our bread is from McDonald’s and our circuses (much like then) are in arenas.